The Return of the Blue Light Special

By Eric Peters, Automotive Columnist

Really basic, really inexpensive cars are coming back. The car companies recognize that there are millions of Americans who just can’t afford a $17,000 “economy” car and are retooling prices (and cars) to reflect this new reality.

Nissan was the first major automaker to bring back a brand-new car with a sticker price under $10,000 — the 2010 Versa 1.6. The Versa 1.6 doesn’t come with power windows, locks — or even a radio — but it’s new and it’s fully warranted and almost anyone can afford to buy it.

How much lower will it go?

In the next year or two, India’s Tata Motors is expected to offer a version of the Nano micro-car the company currently sells in the home market for the equivalent of about $2,000 in U.S. dollars. It will cost considerably more to update the car’s emissions and safety equipment to make it legal for sale here, but the bottom line U.S. sticker price is still expected to be less than $8,000 — and possibly as low as $5,000. (See for details.)

Truck buyers interested in a compact-sized, diesel-powered pick-up, meanwhile, will likely be interested in the Mahindra (also from India). It will be the only compact-sized 4WD truck sold in the U.S. with a standard (high-mileage) diesel engine — and it will have a class-leading two-ton payload rating. Base price expected to be in the low $20k range, which is cheap for a diesel-powered truck. Standard and crew cab versions will be available. (See for details.)

China’s Geely Motors and other Chinese automakers are also expected to enter the American market with their own budget-priced offerings by 2011, if not sooner. These will be similar in size and general layout to the Tata Nano, though there may be some larger (even mid-sized/family-type) cars brought here as well. None of these should cost over $15k and the subcompacts ought to cost under $10k. (See for more details.)

Ford is bringing back the Fiesta — an appx. $13k family sedan — and GM is expected to announce a new subcompact hatchback called the Spark that will be brought to market sometime during calendar year 2011.

Also: The fact that buyers will soon have access to super-affordable cars from India and China is going to put enormous pressure on the rest of the industry — from the Koreans to the Big Three — to chop down the prices of their own offerings — and not just the cheapies. Evidence of this is already apparent in the prices of many 2010 models, which are actually lower than the same models were in 2009.

Expect to see more cost cutting as the months roll on — the one upside to the economic downturn!

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